Cheat Sheet: Gift of Property

1. Statutory Framework

1.1 Transfer of Property Act, 1882

2. Essential Elements of Valid Gift

2.1 Core Requirements

2.2 Capacity of Donor

• Must be competent to contract under Section 11 of Indian Contract Act
• Must be of sound mind at time of making gift
• Minor cannot make valid gift
• Person of unsound mind cannot make valid gift
• Pardanashin woman: Gift valid if made with free consent and understanding
• Donor must be owner of property or have authority to transfer

2.3 Capacity of Donee

• Any person capable of holding property can be donee
• Minor can be donee; gift deemed accepted unless rejected by guardian
• Unborn person cannot be donee directly; gift to unborn void
• Company, society, or trust can be donee
• Gift to group of persons valid if identifiable

3. Formalities for Valid Gift

3.1 Immovable Property

3.2 Movable Property

• Transfer effected by delivery of possession
• No requirement of written instrument or registration
• Delivery may be actual, symbolic, or constructive
• Actual delivery: Physical handing over of property
• Symbolic delivery: Transfer of means of access (e.g., key to box)
• Constructive delivery: Placing donee in control without physical delivery
• Written deed not mandatory but advisable for evidence

3.3 Acceptance

4. Types of Gifts

4.1 Classification

4.2 Onerous Gifts - Section 125

• Gift coupled with obligation or burden on donee
• Donee must accept gift in entirety or reject in entirety
• Cannot accept beneficial part and reject onerous obligation
• If donee accepts beneficial part, deemed to accept obligation also
• Burden must be specified in gift instrument
• Example: Gift of house with obligation to pay donor's debts

4.3 Universal Donee - Section 126

• Donee who receives all donor's property under gift
• Donor reserves nothing for himself
• Universal donee liable for all debts due by donor at time of gift
• Liability limited to extent of property received under gift
• Creditors can proceed against universal donee for recovery

5. Conditional Gifts

5.1 Validity of Conditions

5.2 Specific Conditions

• Condition against public policy: Void
• Condition for benefit of property: Valid
• Condition of maintenance: Valid and enforceable
• Condition requiring donee to adopt particular religion: Void
• Condition prohibiting remarriage of widow: Valid
• Condition requiring separation from spouse: Void

6. Suspension and Revocation

6.1 Section 127 - Prohibition on Suspension/Revocation

6.2 Permissible Provisions

• Condition subsequent based on external event: Valid
• Gift with life interest to donor: Valid (not complete transfer during lifetime)
• Gift with reversion to donor on specified event: Valid if event not within donor's control
• Gift over to another if first donee dies before specific age: Valid

6.3 Exceptions - When Gift May Be Revoked

• By mutual agreement between donor and donee
• By rescission for fraud, coercion, undue influence, or misrepresentation
• For non-fulfillment of condition precedent
• Under Muslim law (Hiba may be revoked in certain circumstances)
• By court order in case of void or voidable gift

7. Gift under Muslim Law (Hiba)

7.1 Essentials of Hiba

7.2 Distinction from Transfer of Property Act

7.3 Revocation of Hiba

• Donor can revoke gift before delivery of possession
• After delivery, revocation permitted only in certain cases
• Parent may revoke gift to child (except Hanafi law - must be by court decree)
• Cannot revoke gift to spouse
• Cannot revoke if donee is blood relation within prohibited degrees (Shia law)
• Cannot revoke if donee has died
• Cannot revoke if property alienated or destroyed
• Cannot revoke if property increased in value due to donee's efforts

7.4 Types of Gifts under Muslim Law

8. Void and Voidable Gifts

8.1 Void Gifts

• Gift of future property (Section 124)
• Oral gift of immovable property not registered
• Gift by minor or person of unsound mind
• Gift by person not owner of property
• Gift without acceptance by donee
• Gift with condition impossible to perform (if condition precedent)
• Gift to unborn person directly
• Gift against provisions of any law

8.2 Voidable Gifts

8.3 Effect of Void Gift

• No title passes to donee
• Property remains with donor
• Possession must be returned to donor
• Any subsequent transfer by donee is void

9. Gift to Minor

9.1 Section 128 Provisions

9.2 Guardian's Powers and Duties

• Guardian can accept gift on behalf of minor without court permission
• Rejection requires justification if gift is beneficial
• Guardian must act in best interest of minor
• Gift property held by guardian for benefit of minor
• Minor gets absolute title on attaining majority

10. Gift Distinguished from Other Transfers

10.1 Key Distinctions

10.2 Gift vs. Will - Detailed Comparison

11. Important Case Law Principles

11.1 Judicial Interpretations

• Non-registration of gift deed of immovable property renders gift void ab initio
• Delivery of possession not mandatory for validity but evidences completion of gift
• Oral gift of immovable property, even if possession delivered, is void without registration
• Gift deed must clearly indicate intention to transfer ownership immediately
• Mere recital of gift in document without actual transfer does not constitute valid gift
• Donor must part with dominion over property for gift to be complete
• Retention of control by donor indicates incomplete gift
• Gift cannot be made dependent on future uncertain event
• Burden of proving valid gift lies on donee

11.2 Evidentiary Requirements

• Registered gift deed is primary evidence of gift of immovable property
• Attestation by witnesses strengthens validity
• Mutation in revenue records does not confer title but is corroborative evidence
• Possession by donee is strong evidence of completed gift
• Conduct of parties after alleged gift may indicate whether gift was genuine
• Long possession by donee creates presumption of valid transfer

12. Practical Aspects

12.1 Formalities Checklist for Immovable Property

• Draft gift deed clearly stating donor, donee, property description, consideration nil
• Execute on proper stamp paper as per state stamp duty rules
• Signature of donor on gift deed
• Attestation by two witnesses
• Registration before Sub-Registrar under Registration Act
• Delivery of possession (not mandatory but advisable)
• Mutation in municipal/revenue records for record purposes

12.2 Tax Implications

• Stamp duty payable on gift deed as per state laws
• Gift tax abolished in India from 1998
• Gift from specified relatives exempt from income tax in hands of donee
• Gift from non-relatives exceeding Rs. 50,000 taxable as income from other sources
• Capital gains tax may arise on transfer of capital asset by donor in certain cases

12.3 Common Defects Rendering Gift Invalid

• Non-registration of immovable property gift deed
• Insufficient stamp duty paid
• Property not in existence at time of gift
• Donor not owner or lacking authority
• No acceptance by donee or on his behalf
• Condition reserving power to revoke at will
• Gift executed under coercion, fraud, or undue influence
• Donor of unsound mind at time of execution